Volume 3 Context and Appendix


Chapter 9 Enhancing Prosperity and Opportunity


A Context


New Orleans is in the midst of fundamental economic transition. The city has made progress in rebuilding its economy after the devastation wrought be Hurricane Katrina, with some of its key industries such as tourism, maritime trade and advanced manufacturing showing considerable resilience. As this Master Plan is being written in 2009, like other cities across the U.S., New Orleans faces an uncertain economic climate that, if prolonged, could stall its progress. However, the city is more fortunate than most in that already-committed funding for rebuilding will continue to prime the economy and provide significant employment. Yet where will the city be and what economic direction will it take at the end of the rebuilding process?

Whatever the short-term economic prognosis, it is virtually a given that New Orleans’ economic future will not look like its past. Few local industries will be untouched by national and international forces that are transforming the economic landscape. While their ability to influence broad economic forces is limited, city government and other economic stakeholders must understand the competitive challenges and opportunities facing the city’s economy and take the actions necessary to provide the most favorable competitive environment for economic sustenance and growth. This chapter of the Master Plan identifies and describes New Orleans’ important economic base industries—established, emerging, and potential—as well as the building blocks of economic prosperity that create the environment for development of human capital and new enterprises.

Economic base industries sell their products and services to business and consumers from elsewhere— regionally, nationally, and internationally—and therefore import income that circulates within  the local economy, creating jobs and increasing business revenues. These industries are the key to wealth creation and economic prosperity. Established economic base industries include tourism, arts and culture, the maritime trade, advanced manufacturing, and oil and gas. Emerging industries—industries that are still relatively small but where strong growth opportunities exist—include life sciences, and media and film. Potential industries—embryonic industries that have the potential to develop and grow in New Orleans because of the competitive advantages New Orleans offers—include segments of alternative energy technology, coastal protection and restoration technology, and advanced building technology. Emerging and potential industries can benefit from the state of Louisiana’s “Blue Ocean” initiative. This strategy is designed to identify and cultivate high-growth industries that are not yet dominated by other states through offering innovation, high value, and low cost. The chapter discusses the prospects for sustaining and growing these industries and the key factors that will influence their growth trajectories.

New Orleans’ ability to grow, promote and sustain the processes of innovation, trade, and investment— its capacity to produce—is the key to achieving shared and sustainable economic growth. This capacity to produce is most directly a function of the characteristics of what can be called the community’s economic building blocks—its human resources, its entrepreneurial climates, physical infrastructure, economic institutions, and general quality of life—and, more importantly, how these building blocks are put to use.

New Orleans’ human capital is the foundation of the economy. Under the traditional economic development paradigm, people followed jobs. Businesses chose locations based on factors such as proximity to markets or raw materials and access to transportation. Once businesses were established, people migrated to available jobs in search of economic opportunity. Under the new paradigm, the equation is reversed—jobs follow people. This is particularly true in the case of industries that rely on the most skilled and talented people and offer the highest-quality jobs. Cities that educate their youth to become highly productive workers and that offer the quality of life that attracts and retains highly skilled professional and technical talent are in a better position to attract and grow the high value-added, high growth companies whose workforces are their most important assets. Key human capital building blocks include high quality education and workforce training at all life stages, cultural and recreational amenities, and vibrant, safe, convenient, and environmentally sustainable neighborhoods.

Similarly, cities that develop a strong entrepreneurial culture can attract and retain footloose entrepreneurs seeking to exploit new product and market opportunities. Key entrepreneurial building blocks include a robust academic research base that aggressively moves technology into the commercial marketplace, a risk-oriented investment community, a critical mass of professional services and technical assistance, appropriately designed and priced physical space, and, in an age of increasing connectivity, ample opportunities for networking and collaboration.

Other economic building blocks are also important. One is physical infrastructure to support a variety of industries. A second is governmental functions that influence the business environment. Local government must use tax revenues as efficiently as possible to minimize the tax burden. And it must minimize regulatory burdens while carrying out legitimate regulatory functions. At the same time, it must effectively provide the basic public services that businesses depend on to carry out their day-to-day operations.

As one of the nation’s largest ports, New Orleans’ economy historically relied on manufacturing, oil and gas, and transportation, but since the mid-1980s, the city economy has been in transition. During the economic boom caused by the rapid increase in oil prices during the first energy crisis of the late 1970s and early 1980s, the New Orleans region added 100,000 new jobs, an increase of almost 25 percent. With the end of the oil boom in 1982, the oil and shipping industries entered a 10-year downturn, magnified by the migration of many oil and gas businesses to Houston and Dallas. Unemployment spiked and many residents left the region seeking jobs elsewhere.

In the 1990s, growth in the tourism industry stabilized the economy, aided by public and private investments to position the city as a major convention, tourist and sporting event destination— construction of the Convention Center, Harrah’s, the New Orleans Arena, retaining the New Orleans Saints, and attracting a professional basketball team, the New Orleans Hornets. The growth of the tourism industry helped to mitigate the impacts of the oil and gas industry decline, but left the city heavily dependent on a single industry with lower quality jobs than those they replaced. Another bright spot in the regional economy during this time was the Port of New Orleans, which experienced significant growth having invested over $350 million in capital projects in the 1990s that modernized its riverfront terminals, including over $5 million in cruise ship facilities augmenting the city’s tourism industry. However, unlike some other cities in the 1990s, New Orleans offered relatively few “new economy” jobs, ranking 38th out of the 50 largest metropolitan areas in an index measuring the role of high technology and new industries in local economies.1

The impacts of Hurricane Katrina caused a disastrous, but temporary, fall in employment. Between the first half of 2005 and the first half of 2006, local wage and salary employment declined by fully 40 percent, a total of 97,000 jobs. However, by the first half of 2008, employment stood at about 70 percent of pre-Hurricane Katrina levels, with 25,000 of the 97,000 jobs lost having been restored. The New Orleans metropolitan area had the lowest unemployment rate, 5.3 percent, of any large metro area in the country in April 2009.

Some of the job growth since Hurricane Katrina can be attributed to recovery-related jobs that are likely to influence employment data for years to come, but will decline in importance as recovery activities wind down. Other growth areas may indicate longer-term strengths. Jobs in construction and in professional and technical services, the latter of which is dominated by legal services and architectural and engineering services, have experienced higher than average employment growth since Hurricane Katrina. The information industry sector, which includes motion picture production and digital media, has experienced the strongest growth of any industry sector, returning to pre-Hurricane Katrina levels by the second half of 2008. Arts, entertainment and recreation, a key tourism industry driver; manufacturing, which is dominated by aerospace and ship manufacturing; and oil and gas, have all added employment at a faster than average pace. Industry sectors with slower than average growth include transportation and warehousing, which encompasses the important maritime trade industry, retail, health care, and education. Although warehousing is very strong elsewhere in the current economy, the slow post-Hurricane Katrina recovery reflects the lack of an industrial manufacturing base and smaller consumer population base in the New Orleans area. The many recovery-related residential, commercial, and institutional construction projects in the pipeline, along with new spending generated by the national economic stimulus package, are softening the effects of the 2008–2009 recession.

While New Orleans has a limited ability to influence the larger global forces that are shaping conditions in 2009, the city’s longer-term economic future will be shaped by how it responds to the economic challenges and opportunities that are emerging at the national, regional, and local levels. The extent to which city government and other local economic stakeholders improve conditions over which they do have some control—efficient provision of basic city services, enhancing the residential, cultural and recreational amenities that attract foot-loose businesses and professional workers, improving workforce skills, providing modern transportation and telecommunications infrastructure, and supporting entrepreneurship—will influence the short-term pace of recovery and the long-term prospects for a strong and sustainable economic base.


1  New Orleans City Report published by NOLA.com 8/13/06.

1.Established Industries

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